PROPERTIES OF ISOQUANTS•Isoquants Slope Downwards from Lefts to Right:

A

B

F

D

OX

Y

Y2

Y1

X1 X2

• Isoquants never cut, Touch or Intersect Each Other:Y

O

Y

YC

XO

O

X

XA

A

A

B

B

BC

C

FIGURE-1

FIGURE-2

FIGURE-3

Isoquants are covex to the Origin

ECONOMIC REGION OF PRODUCTION

Y

A1

A2

A3

A4

B1

B2

B3

B4

IQ1

IQ2

IQ3

IQ4

X

O LABOUR

CA

PIT

AL

OPTIMUM COMBINATION OF FACTORS

A profit maximizing producer aim to minimize his cost for producing a given output or maximize the output, given the total cost, this aim can achieved by securing the optimal combination of factors, the ultimate choice depends upon,

–Technical possibilities of production, and –The price of factors used for the production of a particular product.

ISO-COST LINE

Rs. 200

Rs. 300

Rs. 400

80

60

10

20

30 40

40

20O

Y

X

B

D

F

A C E

PRODUCER’S EQUIBRIUMC

apita

l

O

Y

X O

Y

XLabour

E1C

D F H

E

IQ2

U

TG

RP

Q

IQ

E2IQ3

IQ1

A

BC

apita

lLabour

Figure-1 Figure-2

EXPANSION PATH

G

E

B

A

F H

C

DO

Y

X

Expansion Path

E1

E2

E3

E4